Econometrics Seminars

Title: Mortgage Regulation in Frictional Housing Markets

Abstract: This paper investigates how mortgage regulation affects housing market outcomes and household welfare in segmented housing markets with search frictions. Using unique transaction data from China, I estimate a structural model of home listing, selling, and purchasing for heterogeneous housing products to capture housing market microstructure. Through counterfactual experiments, I quantify the impact of changes in mortgage credit conditions on house prices and market liquidity. The results suggest that the impact of mortgage regulation varies significantly across housing segments and markets, resulting in a substantial redistribution of welfare, particularly large losses for homebuyers. Moreover, the effectiveness and welfare implications of mortgage policies depend on the source of market frictions and the duration of the policy intervention.